REC profit drops 21.69% as margin falls for fourth straight quarter
Revenue declined 5.02% year on year while expenses grew 13.63%, and the stock's five-session fall exceeded its typical post-results move.
Filed 28 Apr 2026, 15:19 IST · REC Ltd (RECLTD)
Key takeaways
- Consolidated net profit fell 21.69% year on year as revenue declined 5.02% while expenses rose 13.63%.
- Operating margin narrowed 4.09 percentage points sequentially to 91.55%, marking a fourth straight quarterly decline.
- The stock fell 5.01% after five sessions, versus a 2.98% median absolute move after the last eight results.
Price around the results
Higher costs and interest cut consolidated profit
Consolidated revenue fell 5.02% year on year, while expenses grew 13.63%, pushing operating profit down 6.44%. Interest expense also rose 1.85%, and the tax rate increased 2.06 percentage points, adding to the pressure on profit before tax and net profit. Other income contributed only 0.44% of pre-tax profit, so it did not materially support earnings quality.
Expense surge drove the sequential margin decline
Sequentially, revenue fell 3.02% while expenses jumped 88.10%, so operating margin narrowed 4.09 percentage points. Interest expense declined 3.37%, but that was not enough to offset the cost increase and weaker revenue. Operating margin has now fallen each quarter from 98.53% in Q1FY26 to 91.55% in Q4FY26.
REC remained well above the reported peer median
REC's 91.55% operating margin was 32.14 percentage points above the 59.41% median for the 52 Financial Services peers that had reported the quarter. The comparison shows that the margin decline was significant for REC, even though its operating margin remained above the sector reference point.
The initial reaction was ordinary, but losses widened
The stock fell 0.60% on the result day and was down 5.01% after five sessions. Its last eight results produced four rises and four falls, with a median absolute move of 2.98%; the initial move was therefore within its usual range, while the five-session decline was larger than typical.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹14,564 cr | ₹15,018 cr | -3.02% | -5.02% |
| Other income | ₹20 cr | ₹23 cr | -13.48% | +31.96% |
| Expenses | ₹1,231 cr | ₹655 cr | +88.10% | +13.63% |
| Operating profit | ₹13,333 cr | ₹14,363 cr | -7.17% | -6.44% |
| Operating margin (%) | 91.55% | 95.64% | — | — |
| Interest | ₹8,931 cr | ₹9,243 cr | -3.37% | +1.85% |
| Depreciation | ₹7 cr | ₹7 cr | +1.32% | +6.16% |
| Profit before tax | ₹4,415 cr | ₹5,136 cr | -14.05% | -19.59% |
| Tax | ₹1,039 cr | ₹1,084 cr | -4.11% | -11.90% |
| Net profit | ₹3,375 cr | ₹4,052 cr | -16.71% | -21.69% |
| EPS (₹) | ₹12.69 | ₹15.39 | -17.54% | -21.86% |
Operating margin of 91.55% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -0.60% | -0.19% |
| Next session | -3.84% | — |
| 5 sessions | -5.01% | -6.00% |
| 15 sessions | -11.92% | — |
| 30 sessions | -10.90% | — |
Volume on the results session was 1.26× its 20-day average.
What to watch
- Whether operating margin recovers from 91.55% after four consecutive quarterly declines.
- Whether expenses reverse the 88.10% sequential increase recorded in Q4FY26.
- Whether net profit moves back from the 21.69% year-on-year decline.